FedEx Gets Hit As Higher Wages Decrease Earnings

missed earnings-per-share estimates when it reported after the closing bell on September 21. This was the second quarter in a row of missed earnings.

There was an important warning on the company’s daily chart. A death cross was confirmed on September 15. By definition, a death cross occurs when the 50-day simple moving average falls below the 200-day simple moving average. The stock closed that day at $256.59. The stock ended last week at $226.64 with its semiannual value level at $215.97.

Wall Street analysts lowered their price targets after FedEx warned that higher wages were decreasing earnings. These price targets remain well above where the stock is trading. Its quarterly pivot at $269.17 failed to hold on August 26 as a technical warning.

FedEx has a p/e ratio of 12.95% with a dividend yield of 1.31%, according to Macrotrends. The company was beating earnings estimates until the past two quarters.

The Daily Chart for FedEx

FedEx had been above golden cross over the last 52 weeks until a death cross formed on September 15. The 50-day simple moving average (in blue) at $270.24 is below the 200-day simple moving average (in green) at $276.60. The upper horizontal line is the annual pivot at $293.69. This was a magnet between April 13 and July 19. The 52-week high of $319.90 was set on May 27. This pivot failed to hold on July 27. Before this breakdown the 50-day SMA became the resistance line between June 15 and July 21.

Shares of FedEx failed to hold its 200-day SMA on August 17 as a warning at $279.51. The middle horizontal line is the quarterly pivot at $269.17. This level failed to hold on August 26 as another warning. The downside risk is to the lowest horizonal line at $215.97, which is the semiannual value level.

The Weekly Chart for FedEx

The weekly chart for FedEx is negative but extremely oversold. The stock is below its five-week modified moving average at $260.99 with its 200-week simple moving average or reversion to the mean at $213.36.  The 12x3x3 weekly slow stochastic reading is declining at 5.53. The scale is 00.00 to 100.00. Being below 10.00 makes the stock too cheap to ignore.  

Trading Strategy: Buy shares of FedEx on weakness to its semiannual value level at $215.97 and to its 200-week simple moving average at $213.36. Reduce holdings on strength to its 50-day simple moving average, which is declining at $270.24.

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